Diamondback Energy, a leading shale producer, announced on Monday that it would acquire Endeavor Energy Partners, the largest private oil and gas company in the Permian Basin, for about $26 billion, including debt.
The deal would create the third biggest producer in the Permian, the most prolific oil and gas region in the U.S., behind only Exxon and Chevron, who have also made recent acquisitions in the area.
The transaction is part of a wave of consolidation in the Permian, as oil and gas companies seek to boost their output and lower their costs amid high stock prices and rising demand for energy. The largest deal in 2023 was Exxon’s purchase of Pioneer Natural Resources for about $60 billion.
“Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last 12 years, and this combination allows us to bring this cost structure to a larger asset and allocate capital to a stronger pro forma inventory position,” Diamondback CEO Travis Stice said in a statement.
The combined company would have a production capacity of 816,000 barrels of oil equivalent per day (boepd) and annual synergies of $550 million, resulting in more than $3 billion in net value over the next decade.
Reuters reported on Sunday that Diamondback and Endeavor were in merger talks, citing sources familiar with the matter.
The deal to buy Endeavor consists of about 117.3 million shares of Diamondback common stock and $8 billion in cash. Endeavor was founded almost 45 years ago by Texas oilman Autry Stephens, a former appraisals engineer who became famous for his appearances on the TV documentary series Black Gold. Stephens grew Endeavor by acquiring the unwanted acreage of his rivals and extracting oil and gas efficiently.
Endeavor’s operations cover about 350,000 net acres in the Midland portion of the Permian and it expects to produce some 350,000 to 365,000 boepd in 2024.
Diamondback expects the deal to close in the fourth quarter and its stockholders are expected to own 60.5% of the combined entity, while Endeavor will own the rest.
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